Iran is ready to sign a key agreement on the return of nuclear fuel to Russia that will enable Moscow to launch the first controversial nuclear power plant in the Islamic republic, Tehran's ambassador revealed.

News agencies quoted Iran's ambassador Gholamreza Shafei as telling reporters that an agreement may be reached during a visit to Iran by Russia's atomic energy chief Alexander Rumyantsev later this month.

"Rumyantsev will visit Iran at the end of February to discuss this question," Shafei said Tuesday.

"Tehran is ready to sign a commercial agreement on this issue," he said in reference to the return of the nuclear fuel.

The issue has remained the key impediment to Moscow's launch of a nuclear power plant that is being built under an 800 million dollar contract at Bushehr.

Last month, Russian officials said that Bushehr could be launched at the end of the year and produce its first nuclear energy for use by the public at the start of 2006.

Shafei said Tuesday the launch will occur in 2006, although it remained unclear if he was referring to the start of operations at Bushehr or the production of nuclear energy. He further said that Russia and Iran were negotiating new arms deals, although he failed to provide further details. "We are continuing talks on military-technical and defense cooperation," he said.